KUALA LUMPUR: The Brent crude price is likely to remain above US$100 per barrel (bbl) over the next five months as the conflict in the Middle East escalates, according to Public Investment Bank Bhd (PublicInvest).
The firm has upgraded its call for the oil and gas sector to "overweight" as it sees greater supply risk emerging with the controlled access to the Strait of Hormuz.
"Our base case assumes Brent remains above USD100/bbl over the next five months. This reflects the time required to restore shipping confidence, the gradual drawdown of global inventories to absorb supply disruptions, and the persistent elevation of geopolitical risk premiums," it said.
PublicInvest said prices could moderate toward US$90 per barrel later in the year if tensions de-escalate and tanker traffic through the Strait of Hormuz gradually normalises.
The firm raised its Brent crude price assumption to an average of US$95/bbl for 2026.
It added that investors' portfolios should be positioned in commodity-related sectors such as oil & gas and plantation to seek protection against the risk of rising global inflation.
"While the immediate aftermath of an outbreak of hostility is higher oil prices, its consequences on the global economy and, therefore, the financial markets would make for a more complicated and lasting impact.
"Given an already bleak outlook for the US economy as the recent job data suggests a slowing economic activity, the US Federal Reserve (Fed) decision on interest rates would have a major implication on the global stock market," the bank said.
The firm believes the war may be a protracted one, as the Iranian government is unlikely to concede to US demands for surrender.
Should there be a supply shock in the global oil market, the firm said inflationary pressures will broaden, leading to a shift in economic policies.
Its top picks are Bumi Armada Bhd, Hibiscus Petroleum Bhd, Ta Ann Holdings Bhd and Malaysia Smelting Corp Bhd. It also continues to like Malayan Banking Bhd and CIMB Group Holdings Bhd for its consistent dividend and defensive domestic earnings.
Sectors that are expected to be negatively affected include airlines, construction, auto and gloves.